Iowa utilities propose to ‘pilot’ a rate hike for solar customers

Five months after state regulators strongly urged them to develop pilot projects that would “expand renewable (distributed generation) in Iowa,” Iowa’s two largest utilities have proposed new rate systems that critics contend would do just the opposite.

“It’s now official,” said Andy Johnson, a clean-energy advocate and the director of the Winneshiek Energy District. “MidAmerican and Alliant are presenting road maps to move away from net metering in Iowa.”

On Monday, the utilities filed documents with the Iowa Utilities Board, outlining in fairly general terms how they might modify the way they treat distributed wind and solar generators owned by customers.

“Our company is making a thoughtful move towards using cleaner energy,” said Justin Foss, speaking for Alliant. “We have listened to customers and there is growing interest in having a direct connection with renewable energy generation. Our goal is to create program options that make it easier for customers to access solar energy.”

Both utilities said they intend to develop community solar arrays, which they would own. And MidAmerican said it intends to install a one-megawatt battery in conjunction with its community solar system, to better understand how to integrate storage with the grid.

“I think that’s a positive,” said Josh Mandelbaum, a lawyer for the Environmental Law & Policy Center who generally advocates for more renewable energy. “Coupling generation with battery technology allows you to capture the full benefits of distributed generation.”

Johnson was less impressed with the utilities’ plans to build their own solar generation.

“There’s nothing wrong with utilities owning renewables,” he said. “We think they should own more solar – and faster. But don’t try to exclude the rest of us from building or owning wind or solar and getting just compensation.

“That’s what this docket is about…but the utilities are trying to take it towards utility ownership and towards policies that disallow and penalize customer and community ownership.”

To that end, Johnson filed his own pilot on Monday – a proposal to create a “shared solar” array that would provide renewable power for a half-dozen educational and government entities in Winneshiek County in northeast Iowa. He said he has periodically discussed his vision with Alliant over the past year, but has gotten a cool response.

Restructuring rates

Both Johnson and Mandelbaum expressed concern that the two sets of proposals from the utilities clearly seemed to put the priority on restructuring rates for self-generating customers – generally homeowners or businesses with rooftop solar panels.

Alliant outlined a two-tiered system of rates governing payments to customer-generators. Instead of paying the retail rate, as it now does, for all power produced by qualifying solar and other distributed generators, Alliant would like to experiment with paying much less.

Excess generation no longer would roll over from month to month. Instead, at the end of each month Alliant would pay the average annual retail energy rate to offset the energy actually used during that month. Alliant would exclude the costs of transmission and energy efficiency from its calculation of the rate, because it reasons that customer-generators use the grid and have full access to efficiency benefits.

For electricity produced in excess of consumption for any given month, Alliant proposes paying the average wholesale energy market rate, or what it typically would pay for power on the market. That is often in the range of 20 to 30 percent of the retail price that self-generating customers are now paid.

MidAmerican’s proposal is a bit different, and calls for adding a monthly demand charge – based on the customer’s peak energy use in a given month. The demand charge would apply only to the generation customers initially, but might apply more broadly in the future.

Solar: Subsidized or undervalued?

Both utilities contend that net-metering customers don’t pay enough to cover their use of the transmission infrastructure. The result, according to Alliant and MidAmerican – is that the customers who don’t generate any of their own power subsidize the few who do.

“The need for some type of new pricing structure is about fairness for all MidAmerican customers,” the company said in the document it filed on Monday with the state regulator. “As the amount of private generation connected to the system grows, this discrepancy will cause more costs to be shifted to non-private generation customers through higher rates.”

In their discussion of the costs of distributed generation, however, the utilities are leaving out part of the story, according to Johnson.

“They refuse to acknowledge also the benefits provided by [distributed generation] customers, especially solar customers,” Johnson said. “Those have been demonstrated in studies across the country.”

In a recent appearance before the Iowa Utilities Board, energy consultant Karl Rabago pointed out that value-of-solar studies have now been done in about a dozen states, and although the three utility-funded evaluations found that the costs of rooftop solar slightly exceeded the benefits, the other eight studies calculated the benefits as higher – and in some cases substantially higher – than the costs they impose on the grid.

Given the small number of distributed generators on the grid in Iowa, there is widespread agreement that the conditions aren’t yet ripe for such a study. However, Mandelbaum said he thinks it’s not too early to begin planning for such a study by, for example, outlining what kind of information should be collected.

But that would require the consent and participation of the utilities, which Mandelbaum says appear to be intent on ending net metering.

“I think that’s what the rate-design proposal is designed to do,” Mandelbaum said. “If this becomes only about rate design – and that’s clearly an emphasis of the utilities – then it’s about getting out of net metering and will ultimately limit distributed generation, which is not in the spirit of what the board ordered.”

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Karen spent most of her career reporting for the Kansas City Star, focusing at various times on local and regional news, and features. More recently, she was employed as a researcher and writer for a bioethics center at a children’s hospital in Kansas City. Karen covers Iowa, Missouri, Kansas, Nebraska, North Dakota and South Dakota.